The Paris negotiations where the world will be writing a new international climate agreement are just a year away, and here in Lima, delegates from around the world are discussing their national commitments and contributions that will largely determine the level of ambition in that 2015 deal.
As we trace the path to a resilient and decarbonized economy, we must keep in mind that the Paris agreement will set a framework for the period post-2020. What happens until then?
The science tells us that, even with very ambitious mitigation action, we have already locked-in warming close to 1.5°C above pre-industrial levels. Climate change impacts such as heat-waves, droughts, storms, and other weather extremes may be unavoidable.
Clearly, we cannot wait to address these risks. Clearly, we must invest in resilience, and we must do it now.
We are living at what could be the bottom of a hockey stick of disaster costs. The economic losses caused by natural disasters have increased from an average of about $50 billion a year in the 1980s, to just under $200 billion over the last decade. Climate change and rapid urbanization will only keep pushing costs upwards.
Take coastal cities, for example. We know that thousands of people move to a city every month. Urban population is expected to reach two-thirds of global population by 2050, and most of that growth will be concentrated in fast growing developing countries. In those same cities, people often end up living in informal settlements that are not reached by public services and where their lives and livelihoods are at risk.
It is estimated that average global flood losses will increase nine-fold by 2050, from $6 billion per year in 2005 to $52 billion a year. This forecast only takes into account socio-economic factors, such as growing population and property values. Add in the risks from sea-level rise and sinking land, and global flood damage for large coastal cities could cost $1 trillion a year if cities don’t take steps to adapt.
But most cities are not prepared for the rising sea levels and other extremes that come with a warmer world and that will make future urban floods more devastating. Cities and countries have to plan for 1.5°C and invest in resilience, preparedness and structural defenses. Starting now.
At the other end of the spectrum are small island states – their population is often smaller than your average city. In island countries sometimes one disaster can overwhelm the entire economy. Like in Grenada, where the devastation caused by Hurricane Ivan in 2004 caused losses equivalent to 200 percent of GDP. Or in Samoa, where a tsunami wiped out about 120 percent of their GDP in 2009 and, just three years later, a cyclone caused losses of about 30 percent of their GDP. No economy can grow having to deal with that kind of setback on an increasingly regular basis.
At the World Bank Group, we know that it makes sense to invest in resilience. As a financial institution, it makes good business sense to protect our investments in client countries against the forces of nature. As a development bank it is our fiduciary responsibility to our donors.
Weather-related events already account for almost three quarters of those losses. As climate patterns change, costs will rapidly increase. That’s why we have increased our investment in climate adaptation and resilience from $2.3 billion to $2.9 billion in three years. We are committed to reducing fragmentation of resources to improve effectiveness and reduce the burden on our partner governments – an issue that is especially relevant to small island states. We are also working to integrate climate and disaster resilience in everything we do. As of July 1, all our projects funded by the International Development Association (IDA) – our fund for the poorest – are now screened for disaster and climate risks, and we are developing a resilience indicator for IDA lending.
The truth is that, in a world where we are already locked in a path to 1.5°C warming, resilience and development are inextricably linked. Looking at the next twelve months, with its succession of international development and climate negotiations – from Sendai, to Addis Ababa, to Paris – we have a unique opportunity. We must integrate resilience in the post-2015 development framework and set clear and coherent policy signals that support resilient development.
World Bank Group Vice President & Special Envoy for Climate Change